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Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data

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  • Fredrik Sjoholm

Abstract

Direct foreign investment (DFI) has been argued to be an important channel for international technology diffusion. This has led to extensive liberalisation of DFI regimes in many developing countries, including in Indonesia. Using detailed micro-data from the Indonesian manufacturing sector, we examine the effect on productivity from DFI. The results show DFI to benefit locally-owned establishments, but the effect differs between groups of industries. Spillovers from DFI are found in sectors with a high degree of competition. Moreover, it seems that the larger the technology gap between domestic and foreign establishments, the larger the spillovers.

Suggested Citation

  • Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
  • Handle: RePEc:taf:jdevst:v:36:y:1999:i:1:p:53-73
    DOI: 10.1080/00220389908422611
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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